Measuring the NAIRU – a structural VAR approach

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Title: Measuring the NAIRU – a structural VAR approach
Authors: Zhao, Hongmei
Hogan, Vincent (Vincent Peter)
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Date: Nov-2006
Abstract: We calculate the NAIRU for the U.S. in a framework where inflation and the unemployment rate can respond to each other. The NAIRU is defined as the component of the actual unemployment rate that is uncorrelated with inflation in the long run. Using a structural VAR approach, the NAIRU and core inflation can be estimated simultaneously. Our estimation results show that the NAIRU falls dramatically at the end of 1990s and the long run vertical Phillips Curve shifts back from 6.8 per cent before 1997 to 4 per cent afterwards.
Type of material: Working Paper
Publisher: University College Dublin, School of Economics
Copyright (published version): UCD School of Economics
Subject LCSH: Natural rate of unemployment--United States
Inflation (Finance)--Mathematical models
Language: en
Status of Item: Not peer reviewed
Appears in Collections:Geary Institute Research Collection
Economics Working Papers & Policy Papers

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